The U.S. Economy: Confidence Eroded-Economic Tank Running on Empty
2011; Volume: 30; Issue: 3 Linguagem: Inglês
ISSN
1930-126X
Autores Tópico(s)Economic Theory and Policy
Resumoinformation in this forecast is gathered by Journal from sources it considers reliable. Neither Journal nor the individual institutions providing the data guarantee accuracy; nor do any of them warrant in any way that use of the data appearing herein will enhance the business or investment performance of companies or individuals who use them. Jack Malehorn is a professor at Georgia Military College (Milledgeville, Georgia). He is on the Editorial Review Board to the Journal of Business Forecasting. He has worked as President and CEO of Black Hill Manufacturing Co., and COO of NorCom Advanced Technologies. He has also worked as Chief Economist for United Telephone Company of Pennsylvania and New Jersey, which is an operating company of Sprint. He has taught as an Adjunct Professor at Johns-Hopkins University, Graduate School of Business. For any comments and suggestions, contact him by email at Jmalehorn@yahoo.com. PARTICIPANTS | Conf Board = Conference Board, New York, New York; Global Insight = Global Insight, Eddystone, Pennsylvania; GSU - EFC = Georgia State University, Economic Forecasting Center, Atlanta, Georgia; Moody's Economy = Moody's Economy.com, Westchester, Pennsylvania; Mortgage = Mortgage Bankers Association, Washington, D.C.; NAM = National Association of Manufacturers, Washington, D.C.; Northern Tr = Northern Trust Company, Chicago, Illinois; Perryman Gp = Perryman Group, Wa co, Texas; SP U.S. Bank= Minneapolis, MN; US Chamber = U.S. Chamber of Commerce, Washington, D.C.; Wells Fargo = Wells Fargo Bank, San Francisco, California. U.S. economy has hit a wall. A plethora of events, some foreseen and others quite surprising, have essentially sucked the oxygen out of the room and the outlook for the patient is most alarming. A list of negative components looks like the Saint Valentine's Day Massacre; e.g., turmoil in the Middle East, European credit crisis, ongoing clean up of the disaster in Japan, current political dysfunction in Washington, the Standard & Poor's credit downgrade, continuing debate surrounding the health care bill, surging gasoline and food prices ... to mention just a few. Individually, any of these events could have been handled, but collectively they appear devastating. Most Consensus participants are short of calling for an actual double-dip recession but may be pulling the odds on a technicality. In his quarterly Forecast of the Nation, Dr. Rajeev Dhawan, Director of the Economic Forecasting Center at J. Mack Robinson College of Business of Georgia State University says The problem today isa lack of business confidence which is depressing investment, which in turn is leading to reduced job growth and a concomitant reduction in the consumer's purchasing power. Perhaps the most difficult measure to grasp is the understanding of the importance of confidence, which is critical during a recovery period but is lacking at present. Economic agents in the economy such as households, firms, and investors are mired in a lack of confidence, a situation that consequently delays the necessary spending in the economy. Of course, confidence can turn on a dime, but in a world inundated with information, the usual is expected, which is bad. Mark Zandi, Chief Economist for Moody's, captures this in his latest economic report. Confidence normally reflects economic conditions; it does not shape them. Consumer sentiment falls when unemployment, gasoline prices increase, or inflation rises, but this has little impact on consumer spending. Yet at times, particularly during economic turning points, cause and effect can shift. Sentiment can be so harmed that businesses, consumers, and investors freeze up, turning a gloomy outlook into a self-fulfilling prophecy. …
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